Three Additional Defendants Indicted In Multimillion-Dollar Text Messaging Consumer Fraud Scheme

Executive Vice President at Mobile Aggregation Company and Heads of Two Content Providers Participated in Scheme to Bill Consumers for Fraudulent Text-Messaging Charges

Preet Bharara, the United States Attorney for the Southern District of New York, announced today the unsealing of a superseding indictment (the “Indictment”) charging three additional defendants, FRASER THOMPSON, EUGENI TSVETNENKO, a/k/a “Zhenya,” and FRANCIS ASSIFUAH, a/k/a “Francis Assif,” for their participation in a scheme to charge mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages without the customers’ knowledge or consent – a practice known as “auto-subscribing.”  THOMPSON, who was the Executive Vice President of Operations at a mobile aggregation company based in the United States (the “U.S. Mobile Aggregator”), was arrested this morning in California, and is expected to be presented today in federal court in Los Angeles before United States Magistrate Judge Jean P. Rosenbluth.  TSVETNENKO, who ran at least two different digital content providers based in Australia (collectively, the “Australia Content Providers”), resides in Australia and has not yet been arrested.  ASSIFUAH, who ran a digital content provider based in the United States (“U.S. Content Provider-2”), was previously charged in a criminal complaint and was arrested on April 28, 2016.  Also named in the Indictment were DARCY WEDD, CHRISTOPHER GOFF, MICHAEL PEARSE, YONGCHAO LIU, a/k/a “Kevin Liu,” and YONG JASON LEE, a/k/a “Jason Lee,” all of whom were previously charged for their respective roles in the scheme.

According to the allegations contained in the Indictment unsealed today in Manhattan federal court:[1]

The Auto-Subscription Scheme

From 2011 through 2013, WEDD, THOMPSON, GOFF, PEARSE, LIU, LEE, TSVETNENKO, ASSIFUAH and other co-conspirators engaged in a multimillion-dollar scheme to defraud consumers by placing unauthorized charges for premium text messaging services on consumers’ cellular phone bills, without the consumers’ knowledge or consent, through a practice known as “auto-subscribing.”

During the relevant time period, LEE and two other co-conspirators (“CC-1” and “CC-2”) worked for a digital content provider based in the United States that offered premium text messaging services to mobile phone customers (“U.S. Content Provider-1”).  WEDD, THOMPSON, GOFF, and two other co-conspirators (“CC-3” and “CC-4”) worked for the U.S. Mobile Aggregator.  PEARSE and LIU worked for a mobile aggregator based in Australia (the “Australian Mobile Aggregator”).  TSVETNENKO ran the Australia Content Providers, and ASSIFUAH ran U.S. Content Provider-2.  Mobile aggregators compile, or “aggregate,” charges for premium text messaging services – such as monthly horoscopes, celebrity gossip, and trivia facts – on consumers’ mobile phone bills.

In 2011, CC-1 decided to begin auto-subscribing mobile phone users to U.S. Content Provider-1’s premium text messaging services in order to boost U.S. Content Provider-1’s sagging revenues.  CC-1 approached PEARSE and LIU and asked them to build a computer program that could spoof the required consumer authorizations for premium text messaging services – i.e., a program that could generate the text message correspondence that one would ordinarily see if a consumer was genuinely signing up to receive the services.  PEARSE and LIU agreed to build the program (the “Auto-Subscription Platform”), which was operational by in or about the middle of 2011.  In July 2011, CC-1 approached GOFF, who was the account manager for U.S. Content Provider-1 at the U.S. Mobile Aggregator, in order to obtain a large volume of mobile phone numbers to run through the Auto-Subscription Platform.  GOFF sent CC-1 hundreds of thousands of phone numbers, in exchange for payment, for the purpose of auto-subscribing consumers.

In October 2011, CC-1 met with WEDD and told him, in sum and substance, that CC-1 wanted to auto-subscribe consumers through the U.S. Mobile Aggregator’s billing platform and needed additional phone numbers to do so.  WEDD agreed to assist CC-1 in exchange for an up-front payment of approximately $100,000 and a percentage of the auto-subscription proceeds.  WEDD further told CC-1, in sum and substance, that CC-3, who was the Vice President of Compliance and Consumer Protection for the U.S. Mobile Aggregator, would provide phone numbers to CC-1 and that all payments needed to go through CC-3.  WEDD later received his portion of the payments from CC-1 via CC-3.

After CC-1 received phone numbers from WEDD and CC-3, CC-1 passed them on to LEE, the Chief Technology Officer of U.S. Content Provider-1, who was responsible for verifying that the numbers were still valid and active, and for sorting and filtering the numbers to make it easier to run them through the Auto-Subscription Platform.  After LEE performed these functions, CC-1 sent the numbers to PEARSE and LIU to be run through the Auto-Subscription Platform.

In early 2012, CC-4 approached CC-3 and asked to participate in the auto-subscription scheme.  CC-4 told CC-3, in sum and substance, that CC-4 was friends with ASSIFUAH, and proposed that CC-4 and CC-3 begin auto-subscribing customers with ASSIFUAH and U.S. Content Provider-2.  Shortly thereafter, ASSIFUAH began auto-subscribing consumers to phone numbers he had been given by CC-3 and CC-4 through the U.S. Mobile Aggregator.  In total, ASSIFUAH received over $600,000 in gross payments from the U.S. Mobile Aggregator, a significant portion of which came from auto-subscription proceeds.

Also in early 2012, WEDD, THOMPSON, CC-3, and CC-4 had discussions about how to increase revenues at the U.S. Mobile Aggregator, which were flagging because premium text-messaging services had become less profitable.  Among other things, WEDD, THOMPSON, CC-3, and CC-4 agreed to allow TSVETNENKO to begin auto-subscribing consumers through the U.S. Mobile Aggregator.  By no later than April 2012, TSVETNENKO had started auto-subscribing consumers.  Over the course of the next several months through mid-2013, TSVETNENKO and the Australian Content Providers auto-subscribed hundreds of thousands of phone numbers through the U.S. Mobile Aggregator, and generated millions of dollars of revenue, which the defendants apportioned among themselves and were used to fund a lavish lifestyle of expensive vacations and gambling.                 

WEDD, THOMPSON, GOFF, PEARSE, LIU, LEE, TSVETNENKO, and ASSIFUAH are each charged with one count of conspiracy to commit wire fraud and mail fraud, and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  WEDD, THOMPSON, GOFF, PEARSE, TSVETNENKO, and ASSIFUAH are also each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Bharara praised the investigative work of the Internal Revenue Service, Criminal Investigation Division and the Federal Bureau of Investigation, and expressed his sincere gratitude to the Federal Trade Commission for their support and assistance with the investigation.  He also thanked the U.S. Attorney’s Office for the Central District of California and U.S. Attorney’s Office for the District of Nevada for their help in coordinating the arrests of the defendants.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.Assistant U.S. Attorneys Christian R. Everdell and Sarah E. Paul are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The Minions Gather at Seton Park

  Last night the Minions gathered at Seton Park in Riverdale to see the movie 'MINIONS'. KRVC presented their Movie in the Park along with the help of State Senator Jeff Klein. The hot weather did keep the crowd down, but only a little as it was a beautiful dry night in the park with an occasional breeze, one of which was able to knock over the movie screen before the movie. KRVC helpers were able to secure the giant movie screen so it stayed up and the minions were able to watch their movie.

Above - Was this one of the Minions from the movie 'Minions'

Below - KRVC has an area set up with free bottles of water available for the attendees, along with movie goodies for sale, and Senator Jeff Klein had a table set up with information about his Summer Concert Series. 

Above - KRVC Executive Director (left) introduces Michelle Dolgow of State Senator jeff Klein's office, and Bill Weitz of Congressman Engel's office who spoke briefly before the movie started. 

Below - The movie Minions then began.

Above and below - More scenes from the movie Minions.

News From Attorney General Eric T. Schneiderman

 

Holding Volkswagen Accountable For High-Level Fraud and Deceit

Attorney General Schneiderman, joined by Massachusetts Attorney General Maura Healey, announced lawsuits against Volkswagen alleging that they intentionally sold polluting cars and SUVs, advertised as green and energy efficient vehicles, and attempting to cover up the large-scale fraudulent behavior. As a result of the ongoing investigations into Volkswagen and its affiliates, the suit alleges that the cars were knowingly equipped with illegal “defeat devices" to conceal higher amounts of harmful emissions, violating state environmental laws. 

Combating Vacant and Abandoned Properties with a $13 Million Grant Initiative

To address the growing statewide problem of “zombie" homes, the Attorney General announced a $13 million grant initiative to combat the foreclosure crisis. The Zombie Remediation and Prevention Initiative will help local communities stop the spread of vacant and abandoned homes that banks have left decrepit, and allow local governments to track and rehabilitate these properties.

Ensuring Equal Education Opportunities for Immigrant Families 

As a result of a lawsuit and settlement with the Attorney General's office, Utica City School District will ensure equal educational opportunities for immigrant and refugee students. Attorney General Schneiderman alleged that the District denied enrollment to such students and their families in local public high schools. The office is committed to ensuring that New York’s education system is open to any and all children, regardless of race, national origin, English language proficiency, or immigrant or refugee status.

Enforcing Tax Laws For Art Dealers And Galleries  

Following an investigation into sales tax fraud, the Attorney General reached a settlement with international art dealer Gagosian Gallery. A leading New York contemporary art dealer, Gagosian Gallery will pay $4.28 million and follow agreed upon code of conduct including more transparent transaction details, charge of sales tax for buyers and sellers, and clearer shipping parameters. 

Have a question, comment, or complaint? Click here. You can also learn more about the various initiatives of the Attorney General's office by visiting our website atag.ny.gov. You can also call our General Hotline: 800-771-7755. 

Bronx Democratic County Committee - Upcoming Events

Big Read 2016 When: Sat. 7/30/16 from 11a - 12p Where: Soundview Park Amphitheater - Rosedale and Lacombe Aves. Assemblyman Marcos A. Crespo and Fidelis Care present Friends of Soundview Park Big Read. They will have a reading and giveaway of the book Tutu Goes Green by Tulani Thomas.  To RSVP please visitFOSPBigRead2016.eventbrite.com. Click to Enlarge

Gun BuyBack at Bronx Churches When:  Sat. 8/6/16 from 10a - 4p Where: See flyer for locations  Bronx District Attorney Darcel D. Clark and the NYPD are launching a gun buyback program with no questions asked. Turn in operable guns for up to $200 back.  For more information visitwww.bronxda.nyc.gov, or call (718) 590 - 2272. Click to Enlarge

Van Nest Family Day When:  Sat. 8/6/16 from 12 - 4p Where: Van Nest Park - Van Nest Ave. & Unionport Rd., Bronx, NY Assemblymen Mark Gjonaj and Luis Sepulveda and the Van Nest Neighborhood Alliance invite you to Van Nest Family Day. There will be music, food, games, balloon animals, face painting, and much more!  For more information, contact Assemblyman Gjonaj's office at (718) 409 - 0109, or Assemblyman Sepulveda's office at (718) 931 - 2620. Click to Enlarge

Summer Garden Party for Tish James When:  Sun. 8/7/16 from 1 - 3p Where: The Home of Lewis Goldstein - 2015 Saint Paul Ave., Bronx, NY Lewis Goldstein, Eric Henry, Anthony Perez, and Justin Westbrook-Lowery cordially invite you to a Summer Garden Party in support of New York City Public Advocate Tish James.  To RSVP contact lhg82ad@aol.com, or visittiny.cc/ljgoldstein. Click to Enlarge

International Family Day When: Sat. 8/13/16 from 7 - 9:30p Where: E. 205 St. b/t Bainbridge Ave.  Assembly Member Mark Gjonaj and Council Member Andrew Cohen present International Family Day. Join them for a spectacular cultural event.  For more information and sponsorship opportunities, emailassemblymangjonajevents@gmail.com or call (718) 409 - 0109. Click to Enlarge

Reception for AM Luis Sepulveda When: Thurs. 8/18/16 from 6 - 8p Where: 165 West End Ave, NY, NY You are cordially invited to a reception in honor of Assemblyman Luis Sepulveda with special guest State Senator Adriano Espaillat (Democratic Nominee for US Congress).  To RSVP, email alonsoadam@gmail.com, or call (551) 795 - 4927. Click to Enlarge

In solidarity,   Hon. Marcos A. Crespo, Chair The Bronx Democratic County Committee 1640 Eastchester Rd.

“Abrazo Dominicano in New York”

  Last night's the “Abrazo Dominicano in New York” was missing something and that was State Senator Ruben Diaz Sr. who has hosted every Abrazo in recent memory. Senator Diaz Sr. had a back operation recently which was more complicated than expected. The good senator is in good health, was out in the morning, but could not attend his own Abrazo due to stiffness in his back. Senator Diaz Sr. was the highlight of past Abrazo's, but last night's “Abrazo Dominicano in New York” went on without him as not to disappoint the hundreds of people who attended. Assemblyman Victor Pichardo stood in for Senator Diaz, and while Victor did a reasonably good job, he was no Ruben Diaz Sr. It is the character of Senator Diaz that makes the event so successful, and part of the reason people attend is to see Senator Ruben Diaz Sr. Below are some photos of the event, but as I said before there was something really big missing, and that was State Senator Ruben Diaz Sr. 

Above - The five co-hosts (L - R) Assemblyman Michael Blake, Assemblyman Victor Pichardo, Assemblyman Marco Crespo, Assemblyman Luis Sepulveda, and City Councilman Rafael Salamanca. 

Below - Congressman Jose Serrano joins the 'Fab Five' for a photo. 

Above - 36th State Senate candidate Jamaal Bailey joins Assembly members Blake, Pichardo, and Sepulveda for a photo.

Below - Always a favorite of the crowd Bronx Borough President Ruben Diaz Jr. enters with his wife Hilda who is in the red dress.

Above - Revda Samaris Gross gives the Invocation.

Below - Yolanda Cruz sings the American National Anthem.

Above - Carlos Salecedo Sings the National Anthem of the Republic Dominicana.

Below - Miguel Angel provides some musical entertainment.

Current State Senator Adriano Espaillat, and soon to be the congressman from the 15th district gets in a little fun at Bronx Borough President Ruben Diaz Jr., and Bronx Democratic County Leader Marcos Crespo who supported one of his opponents in the congressional race. 

A.G. Schneiderman Announces Agreements With Two Companies For Deceptive Sales Practices That Resulted In Hidden Charges To Consumers Ordering Products Marketed On TV

Schneiderman: Consumers Have A Right To Understand The True Terms Of An Offer Before They Are Charged

    As part of a wider investigation into deceptive advertising and sales practices allegedly used by the direct marketing industry, Attorney General Eric T. Schneiderman today announced  settlements with Tristar Products, Inc. (“Tristar”), a firm headquartered in Fairfield, New Jersey, and Product Trend, LLC (“Product Trend”), headquartered in Williston, Vermont.  The agreements require the direct marketers to make significant reforms to their advertising, ordering processes and customer service practices.  The marketers sell their products directly to consumers, typically through television and online advertising.  Tristar’s products include Genie Bra; blenders and juicers, as well as a variety of exercise equipment, such as the Ab Coaster and Cardio Twister.  Product Trend’s products include Total Pillow, Wonderhanger and Furniture Fix. 

The agreements also require each marketer to make a monetary payment to the New York Attorney General’s Office for restitution, penalties, costs and fees, with Tristar paying $700,000 and Product Trend paying $175,000.

“These agreements insure that consumers will not be hit with charges they did not authorize and will not be frustrated with long hold times or unresponsive customer service when they seek assistance,” Attorney General Schneiderman said. “The settlements also bring much needed reforms to two major players in the direct marketing industry and insure that consumers will have a clear understanding of the charges before they place an order.”

The Attorney General’s Consumer Frauds Bureau launched a probe into the industry after receiving complaints from consumers, including hundreds forwarded by the Better Business Bureau.

According to the Attorney General’s investigation, both marketers ran misleading infomercials on television that often featured attractively priced “Buy One, Get One” offers, which required consumers to purchase a double order of the advertised product. However, the ads did not adequately disclose that consumers would be charged two separate processing and handling fees or the amount of those fees, which significantly increased the cost of the offer. When consumers placed orders by phone or online, they were subjected to a confusing, automated ordering process that typically included numerous “upsell” offers for additional products. Consumers were also not given the opportunity to review and edit their orders before they were processed. As a result, in some cases, consumers who responded to the marketers’ advertisements were charged significantly more than they expected and received products that they did not intend to order. 

One Product Trend customer responded to a “Buy One, Get One” ad for Total Pillow, advertised for $19.99, plus shipping and handling, but was charged $91.73 after placing an order online. A Tristar customer who responded to a $19.99 “Buy 3, get 3” Genie Bra advertisement ended up being charged $101.83. Although she subsequently returned the bras, Tristar refused to refund the $27.00 charged for shipping and handling.

The Attorney General’s investigation also revealed that consumers who sought warranty service from Tristar for products that malfunctioned or to obtain authorization to return products often faced long telephone hold times and otherwise had difficulty obtaining relief or assistance.

The settlements require the marketers to:

• Clearly and conspicuously disclose all material terms of an advertised offer.
• Clearly and conspicuously disclose the amount of any processing and handling fee for the second item in a “Buy One, Get One” offer.
• Provide consumers with an opportunity to confirm the details and the total price of any order before it is processed.  For orders placed online, this includes presenting the consumers with a checkout or shopping cart page that the consumer can edit.
• Disclose the amount of any processing and handling fees during the ordering process before the consumer is asked to confirm the order details.
• Label all hyperlinks to clearly convey the consequence of clicking the link.
• Email consumers who place orders by phone an order summary with any processing, handling or other charges.
• Ensure that the marketers’ customer service lines are adequately staffed so that consumers are not subjected to long hold times.

In March 2015, the Attorney General and Federal Trade Commission reached a similar settlement with Allstar Marketing Group, LLC located in Hawthorne, New York. 

Consumers who believe they may be entitled to a refund should notify the Attorney General’s office. Consumers can file a complaint online or obtain a complaint form at www.ag.ny.gov. Consumers can also call the Attorney General’s consumer helpline at 1-800-771-7755. 

Former Federal Employee Labor Union President Sentenced In White Plains Federal Court For Stealing Union Funds

  Preet Bharara, the United States Attorney for the Southern District of New York, announced that WILLIAM DAVIS, the former president of the Federation of Government Employees (“AFGE”) Local 1119 (the “Union”), was sentenced today to 15 months in prison in connection with embezzling approximately $150,000 of the Union’s funds.  DAVIS pled guilty on April 6, 2016, and was sentenced today in White Plains federal court by U.S. District Judge Kenneth M. Karas.

According to the allegations in the Indictment:

The AFGE is a national labor union that represents approximately 670,000 workers employed by the federal government across all agencies and departments.  The Union is a local union chapter of AFGE that represents approximately 300 employees of the Veterans Affairs Medical Center-Montrose (the “Hospital”), and maintains offices on the Hospital’s campus in Montrose, New York.  At all times relevant to the Indictment, the Union maintained a checking account (the “Union Bank Account”) for Union funds, including members’ dues payments.

From at least January 2008 through in or about October 2012, DAVIS served as the elected president of the Union.  As the president, it was DAVIS’s duty to preside over the Union’s meetings and conduct the day-to-day affairs of the Union.  During that time period, DAVIS used a debit card for the Union Bank Account (the “Union Debit Card”) issued to a deceased former Union officer to make hundreds of charges and cash withdrawals for non-Union expenses and without the authorization of the Union.  For example, DAVIS used the Union Debit Card at stores and online retailers including Apple, Best Buy, Wal-Mart, and Radio Shack, purchasing items for his personal benefit including electronics, music downloads, video games, cellphones, men’s clothing, gasoline, and cigarettes.  DAVIS purchased money orders using the Union Debit Card that totaled at least $30,000 from the United States Post Office in Montrose, New York.  On several occasions, DAVIS paid for rent for his residence using the money orders he purchased with the Union Debit Card.  DAVIS also used the Union Debit Card to make over 900 cash withdrawals from ATM machines in the Southern District of New York and elsewhere, in the process incurring thousands of dollars of ATM fees and fees for insufficient funds.  Between January 2008 and June 2012, the unauthorized purchases and cash withdrawals that DAVIS made with the Union Debit Card totaled in excess of $120,000.

In order to conceal his misuse and theft of Union funds, DAVIS also made false statements and omissions in annual Department of Labor Office of Labor-Management Standards reports for the fiscal years 2008, 2009, 2010, and 2011, reporting a total of only $7,000 in allowances and disbursements to himself as president.

In addition to the prison sentence, DAVIS, 56, of Wappingers Falls, New York, was sentenced to two years of supervised release.  The Court further ordered that Davis pay $150,000 in restitution.

Mr. Bharara thanked and praised the U.S. Department of Labor Office of Labor-Management Standards and the U.S. Department of Veterans Affairs, Office of the Inspector General for their work in this investigation.